Fiscal cliff top of mind at Australia-US defence talks

Australia will seek reassurance over threatened US defence budget cuts, at a meeting of Australian and US security ministers on Wednesday.

Defence Minister
Stephen Smith
and Foreign Minister
Bob Carr
are due to meet their US counterparts, Defence Secretary Leon Panetta and Secretary of State
Hillary Clinton
, for talks in Perth.

Mrs Clinton will also meet Prime Minister
Julia Gillard
while in Perth.

Mr Smith said President
Barack Obama
had already indicated that his administration’s No. 1 priority was trying to avoid the fiscal cliff.

The automatic package of defence cuts and tax rises that takes effect on January 1 is expected to slash $US1.2 trillion from the US defence and security budget over 10 years unless Republicans and Democrats thrash out a compromise budget.

Australian defence analysts have pointed out that such drastic cuts would have a direct impact on Australia’s defence budget because they would drive up the cost of weaponry purchases. “Leon Panetta has made the point to me that we are all going through fiscal difficulty . . . and if they don’t get the so-called fiscal cliff right, he will be managing $US1.2 trillion worth of cuts over the next 10 years,’’ Mr Smith told the ABC yesterday.

“I’m sure he will be as much focused on his own [budget difficulties] as he is on ours,’’ he added, referring to Australian defence cuts of $5.5 billion this year.

The US ambassador to Australia, Jeffrey Bleich, insisted yesterday that the fiscal cliff “would be averted’’.

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He said Congress had created the fiscal cliff because it triggered such drastic cuts that politicians would be forced to act. “It forces hard decisions about our economy . . . the markets won’t tolerate a long delay in resolving our budget issues and creating a sustainable path for reducing our deficit,’’ Mr Bleich said.

Mr Smith also confirmed that ministers would discuss US plans for the Asia-Pacific after the so-called US “rebalancing" towards Asia.

Mr Obama and Ms Gillard agreed in November last year to rotate up to 2500 extra marines through Australia’s north in a move that is seen as a counter to the rise of China.

Mr Smith said he would be raising the interest expressed by the Association of South East Asian Nations, including Indonesia, in carrying out exercises with Australia and the extra US marines, which would benefit the region.

He said boosting US aircraft visits and making greater use of HMAS Stirling in Western Australia were longer-term goals.

“We’ll start a conversation at our Ausmin meeting but we’re far away from making a decision,’’ Mr Smith said. Ministers are also expected to discuss the Obama administration’s foreign policy agenda after Mr Obama’s re-election. Also set down for discussion are territorial disputes involving China in the South and East China seas, the war in Syria, progress in Myanmar, the troop drawdown from Afghanistan, the threat of cyber attacks and terrorism.

Mrs Clinton will also visit Adelaide after the Ausmin talks. There she will meet business leaders and inspect the Techport facility used in the construction of new warships.

Techport is also likely to be used for a new fleet of submarines to replace the ailing Collins class.